Don’t scale too early with Yashar Nejati of Uppercase

Maren Kate
Welcome to from 5 to 50 the podcast dedicated to helping startups and founders survive and thrive through the early stages. I'm your host, Maren Kate, and we're here with Yashar from Uppercase. Welcome to the show Yashar.

Yashar Nejati
Hi Maren. Thanks so much for having me.

Maren Kate
Awesome. So, first off, when did you found Uppercase?

Yashar Nejati
Uppercase launched last year in September so we’re just a year old now.

Maren Kate
Oh, wow. Nice.

Yashar Nejati
Yeah, the real story actually started about three and a half, four years, ago. We started as a marketplace for short-term space, so a peer-to-peer marketplace, and the initial business was called This Open Space, which is still running and operating, and we branched out from there and created a new product called Uppercase last year.

Maren Kate
Okay, so what was the impetus for spinning off and focusing on Uppercase?

Yashar Nejati
Sure, so This Open Space started really as a way to connect entrepreneurs, other founders, with retail real estate so that they can access it a lot quicker and easier. I started the company because I had a need myself. I had a CPG food business and needed to get easier access to retail rather than traditional 5-10 year leases. After a few years of creating a marketplace, the marketplace grew quite organically and had really nice uptick but we saw that there were really two subsets of users and the product that they needed ended up being very different. So one subset of users were highly transactional, low average order value of under $1,000, and it was highly automated in a pure internet marketplace. And that was the This Open Space business but we had this growing set of users that were their businesses were growing with us and that's where the market was going were that the transactions that they were doing, the retail stores, instead of wanting it for a weekend or a couple of days, they were looking for months or short year, so one or two-year leases, and the interest was coming to the marketplace. The demand was coming there but they were not transacting automatically on a marketplace. They needed a lot of hand-holding so it was more akin to technology-enabled services rather than a pure marketplace model. So because we have these two very different sets of users and one was growing really quickly we created Uppercase as a different product and brand specifically aimed at growing online e-commerce brands who want to scale retail in a serious way.

Maren Kate
Okay, so what's the business model or how do you all make money?

Yashar Nejati
Sure. So the business is really how do we make it easier, faster, and more convenient for these e-commerce brands to open up retail and then scale it from there. So we're a transactional-based business. We get paid when we get a brand into a store. So the innovation isn't necessarily around the business model. We get paid from the landlords no different than traditional brokerages. Where the innovation happens is a couple of ways. One, we use data from brands, e-commerce, and social data to predict exactly where their shoppers will be. So they open up stores and that will give them the highest chance of success based on location data that we provide. And then second, we make the entire process of putting in offers for a space, leasing it, and payment insurance a lot more seamless with an online platform. So our platform is free to use. Our data service is free to use. We only get paid when a brand physically goes into a space.

Maren Kate
That's really cool. That's a unique model it seems like. So how did you found the company? Are you bootstrapped? Did you self-fund? Did you take on external capital?

Yashar Nejati
Yeah, the first year or so of the company we were completely bootstrapped and we took on external capital, an initial friends and family round of about a million, and then about a year and a half ago we raised our seed round from institutional investors, so Lerer Hippeau based out of New York, and that was our first institutional round.

Maren Kate
Okay, and what's your current size?

Yashar Nejati
So now we're 15 people.

Maren Kate
15 people. And are there any numbers you can share? I know with venture, with any kind of raise, usually people don't like to share revenue but anything to kind of give the audience a sense of the growth that you guys have experienced?

Yashar Nejati
Yeah, so both companies are in the same corporate entity. For This Open Space we have somewhere along the lines of about 5 to 10,000 bookings that happen in our marketplace automatically every year and on Uppercase really it's a much lower volume business but it is much higher transaction values but just in the last month or so we did about 25 real estate transactions for brands ranging anywhere from a month-long to five-year leases. To traditional real estate that's a lot.

Maren Kate
Yeah, for sure. And then in terms of you said the two entities are connected so your investors when that seed round converts they'll have ownership in both or will you split them off?

Yashar Nejati
So the seed round is an equity round but for the investors, it's one corporate entity with two brands.

Maren Kate
Got it. Got it. Yeah. Okay. So how do you build your team? Is everyone in an office? Are you guys distributed? How did you think about that?

Yashar Nejati
Yeah, that's a great question. First, when we started we were a little bit more distributed. We had a core office but we were a lot more open to flexible work and had some remote team members and then about halfway through our company's life cycle so far we decided, no, everybody has to be in the office. We all got to be together. And we've reversed position since then, actually. We felt we all had to be together and it felt good but there were some efficiencies but some trade-offs and some downsides to that. So now we are all mainly in an office in Toronto and a smaller office in New York, though we do have some distributed team members, and I think what we learned is different departments can have different rules on that. It doesn't have to be company-wide. And that was kind of a lesson learned so far.

Maren Kate
What were the departments that you felt really needed to be co-located versus distributed?

Yashar Nejati
I think that what we learned is for executives, for product, it needs to be all in the same place, Head of Product roles and key executives, but for a salesperson that's it going to end up traveling a lot anyway, it's better to be flexible with that. With engineers, depending on what role the engineer has, they can be remote and have it still work. So I think that's where we're learning is kind of core team executive in person is required though, beyond that, flexibility, it works out and there's no downside.

Maren Kate
Okay, so how did you go about hiring? I mean, you guys are 15 people now, a little bit spread out but with two offices. Who heads it up? How have you approached that?

Yashar Nejati
Yeah, so our hiring initially, like anything in a company, I think it's just friends and friends of friends and the core network and I think that's still probably where most of our hires come from. At this stage we do post jobs, our investors have been really helpful, and we in turn have leaned on them particularly Lerer, our lead investor, and their talent network. I think we’re seeing more and more VCs have platform teams that do bring some great talent to the forefront. SV Angel is another one of our investors and they're telling her work has been really helpful as well for hiring.

Maren Kate
Okay, cool. So if you had to quantify your special sauce as a leader, what would you say it is? Where do you think you're the strongest or, you know, the thing that allows you to do what you do?

Yashar Nejati
Sure, I think that you know, I went actually through an exercise about a year ago where we asked similar questions to our team. It was for my own personal coaching and getting feedback from those that work with me and are close to me on what I do well and what I can use improvement on. What I do well is communicating the vision and making sure everybody is aligned. I also believe that I have the, I’ll state this really humbly, but I have the ability to make people feel that they can achieve more than they may feel as possible. I think those two things help drive our organization forward. There’s tons of things that I don't do well but communicating the big vision, the big picture, and inspiring people to do more than what they think is capable is probably my superpowers.

Maren Kate
What would you say is your management style and how does that translate?

Yashar Nejati
I think that definitely has changed since I first started the company to today. I think my management style today is one thing I can get better at is being a better consistent manager. I'm good at jumping in, having maybe a really strong half-day working session with somebody, setting them up with some priorities but then the ongoing management for the next three months, let's say we set quarter priorities, is not where I'm very strong at and that ongoing follow up is not my strong suit. So what I find works really well is me coaching people to manage up to me rather than me managing down. So things like people writing a report, a state of me, which they share with me, or being proactive about managing up to me helps. Now, whenever there's communication lacking, then I jumped in and can get, for lack of better words, micromanage-y but that's always when there's communication missing. So for me, it's setting it up so people manage up to me rather than having me manage down.

Maren Kate
I love that. I try to do the same thing and love end-of-week records. I like when people are able to bubble up issues and give you a high level and only really needing to parachute in when either somebody needs some more training or something needs fixing. That tends to give people a lot of latitude to just do their best work if you're hiring people that appreciate that. Not everybody thrives in that work environment.

Yashar Nejati
Yeah. Some people work better when they are managed a little closer.

Maren Kate
Absolutely. I think that's important for people to realize when they're hiring, when they're thinking through building a team in general, is there are different types of people in the world and different styles of management work with certain types of team members. Some people do phenomenally remotely. Some people do much better in house. Just understanding what your culture and what your ability is as a manager and leader and then finding the people that are going to flourish under that.

Yashar Nejati
Yeah, and then that's an ongoing learning, right? What are the signals you look for and what are the questions you're asked to really uncover that before bringing on somebody to the team?

Maren Kate
Exactly. Yeah. Awesome. Okay, so final three questions. What is your favorite book or podcast from the last year?

Yashar Nejati
Oh, that's a great question. You know favorite podcast has got to be probably a series of podcasts and I'm terrible with names so I'm just gonna look it up.

Maren Kate
Ok. Or you could explain it to me and maybe I could guess it. I'm a huge podcast nerd.

Yashar Nejati
Yeah, it was based on… I can't really explain it without giving you the name here but Naval did a series of podcasts.

Maren Kate
Oh yeah!

Yashar Nejati
Naval Ravikant and I found those to be really, really helpful. I think he also talked about a lot of different books and a lot of different ways of thinking. So I would say it was kind of a branch that opened up a lot of different branches for me.

Maren Kate
I love it.

Yashar Nejati
So Naval Ravikant’s podcasts a lot of them are just a few minutes but it's a series and he keeps coming out with more, which is great. In terms of books, I think a book that I'm reading now is The Book of Life by Gita Krishnamurti. I think that's just something to break away from the day-to-day a little bit. And Richard Feynman again I’m terrible with names but Surely You Must Be Joking.

Maren Kate
Oh my gosh, that book is one of my all-time favorites, Surely You Must Be Joking, Mr. Feynman. It is amazing.

Yashar Nejati
I wish I knew him.

Maren Kate
Yeah, such an easy… He speaks so simply for someone that was so brilliant. Very highly recommended. Okay, so what business tool could you not live without?

Yashar Nejati
I wish I had less tools but I think Superhuman has been game-changing. I can't go back to regular email outside of that. I've started doing and I don't know if this is a tool or something that I've just done that I can't live without now but I started doing bi-weekly updates to my team and to my close friends and family about my top priorities and two-week sprints that I run. That has really helped because as a founder you're really accountable to the investors but there isn't that regular checking, as regular, as often as those closest to you and I found that accountability of sitting down and writing that report every two weeks to my team and my close friends and family has been really helpful and the tool for that is just Notes on my phone. So really simple.

Maren Kate
And you write that email to is it all people that have some sort of connection with the business or is it just, you know, can be your best friend and a team member and an early friends and family investor?

Yashar Nejati
It's all my employees, it's my girlfriends, my probably five closest friends, and then my dear mother who wonders what I'm up to all the time.

Maren Kate
Oh, that's really cool. I have not heard of that. I totally have seen people doing personal email lists, and people doing business, but I kind of like that combination of both. Awesome.

Yashar Nejati
So, you know, I'm not on social media. I'm not very active there so staying connected with those closest to you without necessarily having to be on social for everybody.

Maren Kate
Okay, so last question for the founders listening who are somewhere between that 5 to 50-person stage, what's the best piece of advice you've either received or can you give from your experience with Uppercase and obviously your company's before as well?

Yashar Nejati
I think the biggest lesson learned from experience is taking the time to dial in some critical processes before scaling and not scaling too early. Because it's much easier to do those things with a smaller team, to build them in and iterate on them later than to try to establish that with a larger team. We went through a phase where we scaled up, we were up to about 30-35 at some point, and then got back down to a much smaller team and then have scaled back up now. And so that learning that we had, it's like, oh my god, this is so much easier with a smaller team is something that I wish I knew before I started and this is my first company. That's probably the biggest lesson that I can share is nailing some critical processes and the company before scaling.

Maren Kate
And do you think that besides just processes do you also think that the product-market fit makes it, you know, is that an important aspect if it's a smaller team?

Yashar Nejati
Yeah, absolutely. I mean, sorry, when I said processes, I meant everything that's critical before scaling so product-market fit, defining some of what you look for in hires, and some cultural values. The earlier you can do that with a smaller team the easier it is and the more valuable it is down the line.

Maren Kate
I love that. I couldn't agree more. I've definitely done it the opposite way before and it's really painful. Awesome. So how can people find you or Uppercase online? You mentioned you’re not a big social media guy but if people want to check out what you're doing…

Yashar Nejati
Sure. I'm on Twitter. I'm more of a lurker than a poster but I'm on Twitter, just my first and last name so @yasharnejati Y-A-S-H-A-R-N-E-J-A-T-I and then Uppercase is just @UppercaseHQ everywhere. We'd love to connect on Twitter with anybody.

Maren Kate
Awesome. We’ll put those in the show notes too, Yashar, it's been so great chatting. Thank you for taking the time.

Yashar Nejati
No, thank you so much for having me, Maren. This was great. I enjoyed the conversation.